Judgment:
1. The appellants imported 4056 pieces of battery operated toys of parrot incorporating motor under Bill of Entry No. 132139, dated 19-6-97. The goods were valued at Rs. 4,11,967.71 (cif). The Customs authorities held the view that the goods were covered by Exim code 950349.09 for which a specific import licence was required. The importers however, could not produce a licence and vide their letter dated 23-6-97 submitted that they were under the impression that the goods were covered by Exim Code No. 950380.01 which were allowed to be imported under Special Import Licence (SIL). Accordingly, proceedings were initiated against the importers. The importers waived the right of show cause notice. The Additional Commissioner (Appraising) vide order in original dated 7-7-97 held that the imported item was toy parrot with an in built voice producing mechanism. He observed that from the Exim Code it is seen that "toys representing animals or non human creatures" are falling under category of 950340.00. Under this Code - 950341.00 dealt with stuffed toys, 950349.00 dealt with other toys, 950349.01 dealt with toys of wood, 950349.02 toys of metals, 950349.03 other toys (excluding 950310 - 950311) of plastic. He further observed that Heading 950349.09 dealt with all other toys representing animals or non human creatures. These goods are restricted items being in the nature of consumer goods and are not permitted to be imported except against a licence or in accordance with a Public Notice issued in this regard. He, therefore, rejected the contention of the importers that the same were classifiable under code 950380.01 as "other toys and models incorporating a motor". He held that other toys falling under this category allowed to be imported against a Special Import licence are not toys "representing animals or non human creatures". He reiterated his findings that the heading relating to toys representing animal or non human creatures appropriately falls under Exim code No.950341.00 to 950349.09. Since the party imported the goods without production of a valid licence, he ordered for their confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3(3) of the Foreign-Trade (Development & Regulation) Act, 1992 but allowed the redemption of the same on payment of fine of Rs. 5,77,000/-. He also imposed a penalty of Rs. 57,000/- on the party under Section 112(a) of the Customs Act, 1962.
2. The importers filed appeal before the Commissioner (Appeals) which was allowed by the Commissioner (Appeals).
3. The Revenue did not accept the above order of Commissioner (Appeals) and filed appeal before the CEGAT. The CEGAT, SRB Chennai, disposed of the appeal vide Final Order dated 29-5-2001. The Tribunal in its order observed that the order of the Commissioner Appeals) was not a speaking order and accordingly, remanded the matter to him for passing an order afresh. The Commissioner (Appeals) on de novo adjudication has passed the impugned order dated 28-9-2001. In this order the Commissioner (Appeals) has upheld the findings of the original authority and rejected the appeal of the importers.
4. This appeal is by the importers viz. M/s. Durga Toy Manufacturing Pvt. Ltd. 5. We have heard Shri S.S. Radhakrishnan, learned Advocate for the appellants and Shri C. Mani, learned DR for the Revenue. The learned Counsel for the appellants strenuously contested the findings that Exim code 950380.00 covers only other toys and models incorporating a motor, but not all the toys incorporating motor and submitted that this reasoning is not sound. He also relied upon HSN Note (A) under Heading 9503 on page 1711 which says that "many of the toys of this heading are mechanically or electrically operated". He contended that some toys incorporating a motor having been covered under sub-heading 9503.10 (electric trains) incorporating a subheading with a single '-' to the toys incorporating motor other than electric train, has been achieved under sub-heading 9503.80. It is stated that the word - 'other' has been used earlier under the same heading against the subheading 9503.30 while incorporating construction sets or constructional toys. He has contended that the scheme of arrangement of item under the HSN is well known and it is common sense to believe that either for the purpose of levy of duty or for the purpose of import policy, a toy incorporating motor will not be grouped with stuffed or moulded toys under 9503.41 and 9503.49.
6. The learned DR on the other hand reiterates the findings arrived at by both the authorities below and submits that these findings call for no interference and the appeal should be rejected.
7. We have carefully considered the submissions made by both the sides.
The learned Counsel for the appellants has endeavoured to draw out a pattern from the entries in the Exim policy as per the submissions appended above on the basis of which he is contending that all the toys incorporating motor would appropriately be classifiable under the category of Exim code 9503.80 representing the broad heading "Other toys and models incorporating motor". We are not able to countenance this submission for the reasons that firstly this in itself is a residuary entry with a prefix "other toys" meaning thereby that categorization under this code would be warranted only if the imported item is not found suitable to be placed under any of the preceding headings. Secondly, as rightly observed by the lower authorities - there is a specific heading for toys representing animals or non-human creatures under the code No. 950340 00 and the sub-heading 'other' correspond to the code No. 950349 09 is more appropriately covering the item under consideration, since the imported goods are talking parrots which are toys representing animals or human creatures. As the issue under consideration is the interpretation of the entries in the exim code, we see no purpose to refer to the HSN entries as endeavoured to be done by the learned Counsel for the appellants. In this view of the matter, therefore, the order passed by the lower appellate authority does not call for any interference so far as it relates to the confiscation of the imported goods without production of specific licence as per the policy provided under this sub-heading. However, looking at the overall scheme of entries made under different headings in the Exim policy, there appears to be ample scope for misunderstanding and committing a genuine mistake on the part of the importers. In view of this, we reduce the redemption fine to Rs. 3 lakhs (Rupees Three lakhs) and also set aside the penalty on the appellants. But for this modification, the appeal is otherwise rejected.